7th Mar 2008 10:04
Marks & Spencer Group PLC07 March 2008 MARKS & SPENCER ANNOUNCES PRE-FUNDING OF CONTRIBUTIONS FOR UK DEFINED BENEFIT PENSION SCHEME Marks & Spencer has agreed to pre-fund £200m of its annual contributions to itsUK Defined Benefit Pension Scheme for the next three years by increasing thevalue of the Scheme's interest in the property-backed partnership between itselfand Marks & Spencer. This partnership was set up in March 2007 as part of thefunding plan agreed with the Pension Trustee to address the Scheme's deficit. To meet this £200m contribution of value, Marks & Spencer will place additionalM&S properties into the partnership with a current market value of approximately£400m. These properties will be leased back to Marks & Spencer and the fixedannual distribution made out of partnership profits to the Pension Scheme willbe increased from £50m to approximately £72m for the remaining 14 year period. The arrangements enable Marks & Spencer to fund the £200m contribution at aneffective financing rate of approximately 6.1%. The Pension Scheme will hold theenhanced partnership interest (worth around £700m representing the net presentvalue of the future distributions), as part of its total investment portfolio.Marks & Spencer will continue to retain control over the properties held as partof this arrangement, including the flexibility to substitute alternativeproperties. The partnership will continue to be consolidated in the Group's accounts with noimpact on its net assets. The amortising liability in respect of the obligationsof the partnership to the Pension Scheme shown on the Group's balance sheet willincrease by £200m matched by a prepayment which will be released over time asthe annual contributions would otherwise have fallen due. The impact of thefunding plan on the Group's Income Statement is not expected to be material. Statements made in this announcement that look forward in time or that expressmanagement's beliefs, expectations or estimates regarding future occurrences andprospects are "forward-looking statements" within the meaning of the UnitedStates federal securities laws. These forward-looking statements reflect Marks &Spencer's current expectations concerning future events and actual results maydiffer materially from current expectations or historical results. Any suchforward-looking statements are subject to various risks and uncertainties,including failure by Marks & Spencer to predict accurately customer preferences;decline in the demand for products offered by Marks & Spencer; competitiveinfluences; changes in levels of store traffic or consumer spending habits;effectiveness of Marks & Spencer's brand awareness and marketing programmes;general economic conditions or a downturn in the retail or financial servicesindustries; acts of war or terrorism worldwide; work stoppages, slowdowns orstrikes; and changes in financial and equity markets. Contacts: Amanda Mellor, IR +44 (0)20 8718 3604Majda Rainer , IR +44 (0)20 8718 1563Corporate Press Office: +44 (0)20 8718 1919 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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